Thanks for that Jonno,
My advice is that the Tax Office consider that a pension ceases upon the death of a pensioner and unless there is (what they call) an “auto” reversionary pensioner nominated then the deceased members account will then transfer back to being in accumulation mode. After the death of a spouse the other spouse is considered unlikely to be able to deal with tax and super matters immediately – and so in the meantime – between the date of death and when the surviving spouse makes a decision as to whether they will take a pension or a lump sum some time will have passed and during that time the earnings will be open to tax and if any assets are sold (if a lump sum is to be paid) within this “gap” period then CGT will be payable.

Apparently before Simpler Super a reversionary beneficiary , was never shown, at the commencement of a pension. One of the reasons for this was that if the reversionary spouse was younger then the tax free amount of the pension was reduced – a second reason was that for Centrelink again the younger spouse could reduce benefit entitlements. So what most deeds allowed for was for the Trustee to make a nomination regarding a reversionary beneficiary upon the death of a member. The ATO have basically said that is fine but there will always be a gap and they will never accept that the decision to nominate happened immediately upon death.

I can recall when starting Pension that I was told that trustee (which would have been my spouse) could choose a revisionary pension or cash it out .

It appears the mechanics is to roll over fund to a new account with nomination of reversionary pensioner attaching to that account.